Attention Homeowners: 2022 Tax Credits That Make a HUGE Difference
(LibertySons.org) – Owning a home is a major milestone for many Americans. However, there is no denying that while owning your home is a source of pride, it is also a major expense. Planning for these expenses can help, especially at tax time. There are lots of tips and tricks to making owning a home more affordable.
Tax credits are a great tool to cut your homeownership costs, but they can be a bit tricky because they change from year to year. Some also require you to itemize various expenses throughout the year. Keeping on top of the latest tax credits is important!
Here’s what you need to know when filing your 2022 taxes.
Consider Mortgage Interest Deductions
If you have a mortgage, your payments go towards both the loan’s principal and the interest. However, you can also deduct the interest from your taxes, saving you money! If your mortgage agreement was signed on or after Dec. 17, 2017, it is very likely that you can deduct the interest from your taxes and avoid double-paying.
Keep your mortgage date handy when filing your taxes. You will need to enter that information when submitting taxes online or when filing with the help of an accountant. This date will help determine your eligibility for this tax break.
Deduct Property Taxes And Discount Points
You are taxed on property that you own, even if you’re still paying it off. But most people can still deduct $10,000 or less in property taxes a year.
If you used discount points to get a lower interest on the loan for your home, you can also deduct those from your taxes.
These do depend on your local and state guidelines, so check with your accountant what options are available to you.
Home Office Deductions
Are you self-employed? If so, you can tally up the deductions from making and maintaining your home office. You can do so either based on the percentage of your home that your office space uses, or use a simplified deduction.
This deduction does not apply for salaried employees – only self-employed individuals or freelancers. However, if you freelance or are self-employed as supplementary income to a traditional full-time job, you can deduct your home office costs on your taxes.
Deduct Your HELOC and Home Equity Loan Interest
Home equity lines of credit, or HELOCs, as well as home equity loans permit you to borrow against the value of your home.
If you used the HELOC or home equity loan for home improvement projects, like installing a new roof, you can deduct the interest you’ve paid on that loan from your taxes.
Make sure you save all relevant paperwork so you can provide it to your accountant or tax professional!
Standard or Itemized Home-Related Tax Deductions?
When you take care of tax deductions, you will have the option of choosing a standard deduction or an itemized deduction. An itemized deduction considers the amount of money you actually spent, but you need to prove it with receipts from your purchases.
Standard deductions, however, are things that most people spend on for their home, and it often saves you the trouble of going through all your receipts and logging them for an itemized deduction. It is much more convenient, but it sometimes yields a smaller tax return. If you have not spent a significant amount on home improvement projects, you are more likely to benefit from a standard deduction.
Even so, it is smart to save your home expenses paperwork for review.
Good luck with your 2022 taxes as a proud and savvy homeowner!
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